<div class="well"><h2>JavaScript is disabled in your browser.</h2><p>You must have JavaScript enabled in your browser to utilize the functionality of this website.</p><a class="btn btn-primary" href="http://www.activatejavascript.org/" target="_blank">How to activateJavaScript?</a></div>

PwC forecasts 'robust' outlook for European travel

A “robust” forecast for European travel is expected to drive hotel trading but revenue growth will remain weaker after an exceptional 2015, according to PwC’s latest European hotels forecast.

Record tourist arrivals last year propelled hotel performance for many European destinations.

City trips remain a top travel growth segment and strong demand and weak supply growth meant many hoteliers enjoyed a remarkable year in 2015 and will continue to do so in 2016.

The majority of cities included in the forecast, except Brussels and Milan, are expected to achieve revenue growth in 2016 and almost all cities should see additional growth in 2017 - with the exception of Geneva and Rome.

The top cities by revenue per available room (Revpar) growth, in local currency, are Rome (19.2%), followed by Dublin (9.1%) and Prague (6.6%), then Madrid (5.8%), Lisbon (5.7%), Porto (4.5%), Moscow (4%), Barcelona (3.3%) and Berlin (3.1%).

Growth is being driven by a combination of average daily rate (ADR) and occupancy growth.

Rome should see very high occupancy and ADR growth this year with the draw of the Holy Year propelling Rome’s revpar with an expected 25 million visitors and pilgrims, however, this creates difficult comparatives for 2017.

In many top performing cities like London, Dublin, Edinburgh or Amsterdam which operate at high occupancy levels, it is ADR driving the most growth, according to PwC.

Occupancies are forecast to be above 80% in three cities – London (82.9%), Dublin (82.3%) and Edinburgh (81.8%) – this year.

Edinburgh is set to overtake Dublin in 2017. The top three cities will be London (83.5%), Edinburgh (82.5%) and Dublin (82.4%).

Higher occupancy levels reflect a structural shift towards more branded budget hotels in some countries as well as access to online distribution channels combined with greater propensity to travel, PwC said.

The most expensive city this year is Paris (€252.5) with Geneva (€246.8) dropping to second place, followed by Zurich (€219.2); London (€202.2); Rome (€156.5); Amsterdam (€133.9); Barcelona (€129.1) and Frankfurt (€128.4).

Most cities, except Geneva and Zurich, see further ADR growth, although “quite marginal” for Brussels and Moscow.

Liz Hall, head of hospitality and leisure research at PwC, said: “The results overall are very impressive. Many of the cities featured are mature gateway cities and global leaders in trading performance.

“The growth also reflects the continued search for safer and good value destinations as the turmoil in North Africa continues.

“Growth in the travel and hospitality sector is expected to continue to outpace the wider economy, all helped by the weak euro. So far European travellers have only seen modest air fair price reductions as a result of the fall in oil prices – 2016 could herald even better news.”

The latest forecast for London in 2016 and 2017 shows 1.9% and 2.2% revpar growth respectively in each year, lifting it to £120 in 2016 and to £122 in 2017.

But above average supply growth continues and could potentially inflict challenges for existing hoteliers.

This year will see 16,000 rooms added to UK hotel supply, up from 10,000 in 2015. Of these, 7,000 will open in London - more than double the figure added in 2015.

For the UK regions, overall hotel capacity could expand by 9,000 new rooms in 2016, meaning a 2% growth rate, a notch higher than 2015.

Hall said: “The high level of new supply could cause a headache for hoteliers in the capital.

“London seems to soak up new supply but competition is very much a local issue.

“The budget boom continues with around 3,000 new rooms in the budget category - on top of the 3,700 new budget rooms which opened in 2014 and 2015 - and budget rooms comprise about 20% of all rooms in London and 33% of the rooms in the active pipeline. That’s a lot of budget rooms to fill.”

Comments

This is a community-moderated forum.All post are the individual views of the respective commenter and are not the expressed views of Travel Weekly.By posting your comments you agree to accept our Terms & Conditions.